Explain the total effect of an increase in the reserve requirement and a simultaneous decrease in the cash drain on the size of the monetary multiplier.

ECA 251 Money & Banking Summer, 2015
TEST 4 BONUS QUESTIONS

The answers to these questions can be e-mailed to me before the exam or brought in and submitted with the exam.
1.) Explain the total effect of an increase in the reserve requirement and a simultaneous decrease in the cash drain on the size of the monetary multiplier.

2.) Support or refute the following statement: “Changing the nominating process for governors of the Federal Reserve System so that the President can appoint as many as necessary would improve the continuity of economic policy.”

3.) Support or refute the following statement: “Since the Federal Reserve was created prior to the Great Depression its function should not be to stabilize the Financial Markets but rather to stabilize the economy.”

4.) How was the question of profits for American banks resulting from re-construction of Europe after WW I resolved?